On 19 February 2015, we reported on ASIC enforcement actions in the second half of 2014.

ASIC has since updated its regulatory guidance on enforceable undertakings (RG 100).  The updated guidance will apply to enforceable undertakings accepted by ASIC from 9 March 2015.

The changes made to the guidance centre primarily around the engagement of experts to report on compliance with enforceable undertakings. The guidance details the circumstances in which ASIC will seek to appoint an independent expert and the criteria applicable to determining the expert’s independence.

Most significantly, ASIC has made in clear that in the interests of transparency, it will not, save in very rare circumstances, withhold information from the public. In addition to making enforceable undertakings available on ASIC’s register, ASIC will also report publicly about compliance with the terms of the enforceable undertaking, including publishing summaries of final and/or interim expert reports or a statement that refers to the content of the report. The purpose of publishing the summary is to promote the integrity of and public confidence in ASIC’s financial markets and corporate governance.

The summary is expected to be prepared by the expert, although ASIC retains the right to prepare its own summary if it considers the expert’s summary is not adequate or accurate.  The promisor may request that ASIC not reveal parts of an expert report.  However, ASIC must be satisfied that releasing that information would unreasonably affect the promisor’s business or be against the public interest .

The disclosure of the contents of expert reports may lead to the publication of factual matters and opinions that could be more damaging to the reputation of the subject business than would have been by the publication of the enforceable undertaking alone. A business should consider carefully the contents of any report and summary, and liaise closely with ASIC if there are genuine concerns for the reputation of the business or relevance to the public interest.

For further information please contact Matt Ellis.